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  • DXY drops to daily lows in the 98.20 region, rebounds afterwards.
  • US Sec. S.Mnuchin talked down a probable US recession.
  • US CPI figures will be the salient event later in the week.

The US Dollar Index (DXY), which tracks the Greenback vs. a bundle of its main competitors, has given away further gains although some decent support emerged in the 98.20 area.

US Dollar Index focused on trade, data, ECB

The index is finally seeing some respite after four consecutive daily pullbacks, coming down from last week’s YTD peaks near 98.40 and managing to bounce off Friday’s lows in the 98.00 neighbourhood.

Market participants have perceived as positive the comments from Fed’s J.Powell in Zurich on Friday, which translated into fresh oxygen for the buck and pushed DXY to daily tops in the mid-98.00s earlier today.

Moving forward, inflation figures tracked by the CPI will be the most relevant US data release this week seconded by Producer Prices, Retail Sales and the advanced gauge of the U-Mich index.

What to look for around USD

DXY looks recovered from the recent poor performance after Chief Powell reiterated his pledge to support the current expansion, while market participants are still factoring in potential interest rate cuts in the next meetings and a probable recession at some point in 2020. However, the constructive view in DXY still looks firm on the back of the solid labour market, strong consumer confidence and positive GDP readings, while inflation is seeing regaining upside traction in the near term. Also bolstering the buck emerges its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.25% at 98.26 and faces the next hurdle at 99.37 (2019 high Sep.3) seconded by 99.89 (monthly high May 11 2017) and then 100.00 (psychological level). On the other hand, a breach of 98.01 (monthly low Sep.6) would aim for 97.62 (55-day SMA) and finally to 97.17 (low Aug.23).